How Long Is Grace Period For Student Loans

Last Updated on August 25, 2023

With all the different types of loans out there, it can be difficult to know what to expect when it comes to repayment. For student loan borrowers, one of the most common questions is how long is grace period for student loans?

The grace period is the time between when you graduate and when your first payment is due. It is designed to give you a chance to get settled into your new life before having to start paying back what you owe on those pesky loans. But just how long is grace period for student loans? The answer may surprise you.

How Long Is Grace Period For Student Loans?

In most cases, the grace period for federal student loans lasts six months after graduation or dropping below half-time enrollment status at an eligible institution. This means that as long as you don’t go more than six months without making a payment, there won’t be any late fees or penalties assessed against your account. However, if you do go over six months without making payments, then not only will you have to pay any penalties and late fees that accrue during that time but also interest on top of that amount so that everything gets paid off in full once again (and then some).

There are some exceptions though

Petition · Extend the Grace Periods for all Student Loans Public and  Private during epidemic · Change.org

How Long Is Grace Period For Student Loans

A grace period for student loans is a stretch of time, after you’ve graduated or left school, when you’re not required to make payments. Most student loans have a six-month grace period.

The federal student loan forbearance paused payments since March 2020 and will continue through Aug. 31, 2022 with no interest accruing during that period. If you graduated during that time, your six-month grace period may have overlapped with the forbearance wholly or in part. The forbearance will not extend or delay your grace period.

The length of a student loan’s grace period varies by loan type. Here’s how long you’ll have before repayment starts for different loans:

  • Federal direct subsidized and unsubsidized loans: Six months.
  • Federal Stafford subsidized and unsubsidized loans: Six months.
  • Federal direct PLUS loans for graduate students: Six months.
  • Federal direct PLUS loans for parents: Six months, if requested on the loan application.
  • Federal Perkins loans: Nine months.
  • Private loans: Varies by lender. Some offer a post-graduation grace period of six months, while others require payment as soon as the loan is disbursed. Check your loan agreement or ask your lender if you’re not sure.

For recent graduates, the grace period on private student loans will end as originally scheduled in your loan agreement.

When does the student loan grace period start?

For federal student loans, and most private loans, grace periods start when you fall below half-time enrollment. That can happen when you graduate, withdraw, take a gap year or drop classes. Schools have different definitions for half-time enrollment, so check with your financial aid office if you change your class schedule.

If you re-enroll at least half-time before your student loan grace period ends, you’ll receive its entire length in the future. For example, say you start grad school full time five months after graduating. When you finish your graduate program, you’d still have the full six-month grace period for your undergraduate loans. 

Does interest accrue during the grace period?

Federal student loans are not accruing interest through Aug. 31, 2022.

But interest will typically accrue during your grace period unless you have federal direct subsidized loans — just like it did while you were enrolled in school. If that interest capitalizes, you’ll have a bigger balance when your loan enters repayment.

If you have subsidized loans, interest will start accruing on those loans once they enter repayment.

student loan forgiveness

If you are employed by a U.S. federal, state, local, or tribal government or not-for-profit organization, you might be eligible for the Public Service Loan Forgiveness Program. Keep reading to see whether you might qualify.

To ensure you’re on the right track, you should submit a Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application (PSLF Form) annually or when you change employers. We’ll use the information you provide on the form to let you know if you are making qualifying PSLF payments. This will help you determine if you’re on the right track as early as possible.

*This provision will be waived through October 31, 2022 as part of the limited PSLF waiver. Learn more.

Suspended Payments Count Toward PSLF and TEPSLF During the COVID-19 Administrative Forbearance

If you have a Direct Loan and work full-time for a qualifying employer during the payment suspension (administrative forbearance), then you will receive credit toward PSLF or TEPSLF for the period of suspension as though you made on-time monthly payments in the correct amount while on a qualifying repayment plan.

To see these qualifying payments reflected in your account, you must submit a PSLF form certifying your employment for the same period of time as the suspension. Your count of qualifying payments toward PSLF is officially updated only when you update your employment certifications.

Digital signatures from you or your employer must be hand-drawn (from a signature pad, mouse, finger, or by taking a picture of a signature drawn on a piece of paper that you then scan and embed on the signature line of the PSLF form) to be accepted. Typed signatures, even if made to mimic a hand-drawn signature, or security certificate-based signatures are not accepted.

Note: In-grace, in-school, and certain deferment, forbearance, and bankruptcy statuses are not eligible for credit toward PSLF.

Have questions? Find out what loans qualify and get additional information about student loan flexibilities due to the COVID-19 emergency.

Qualifying Employer

Qualifying employment for the PSLF Program isn’t about the specific job that you do for your employer. Instead, it’s about who your employer is. Employment with the following types of organizations qualifies for PSLF:

  • Government organizations at any level (U.S. federal, state, local, or tribal) – this includes the U.S. military
  • Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code

Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF Program.

The following types of employers don’t qualify for PSLF:

  • Labor unions
  • Partisan political organizations
  • For-profit organizations, including for-profit government contractors

Contractors: You must be directly employed by a qualifying employer for your employment to count toward PSLF. If you’re employed by an organization that is doing work under a contract with a qualifying employer, it is your employer’s status—not the status of the organization that your employer has a contract with—that determines whether your employment qualifies for PSLF. For example, if you’re employed by a for-profit contractor that is doing work for a qualifying employer, your employment does not count toward PSLF.

Other types of not-for-profit organizations: If you work for a not-for-profit organization that is not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, it can still be considered a qualifying employer if it provides certain types of qualifying public services.

Full-time Employment

For PSLF, you’re generally considered to work full-time if you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater.

If you are employed in more than one qualifying part-time job at the same time, you will be considered full-time if you work a combined average of at least 30 hours per week with your employers.

If you are employed by a not-for-profit organization, time spent on religious instruction, worship services, or any form of proselytizing as a part of your job responsibilities may be counted toward meeting the full-time employment requirement.

Eligible Loans

Any loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program qualifies for PSLF.

Loans from these federal student loan programs don’t qualify for PSLF: the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan (Perkins Loan) Program. However, they may become eligible if you consolidate them into a Direct Consolidation Loan.

Student loans from private lenders do not qualify for PSLF.

Under normal PSLF Program rules, if you consolidate your loans, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the loans before you consolidated them don’t count. However, if you consolidate these loans into a Direct Loan before October 31, 2022, you may be able to receive qualifying credit for payments made on those loans through the limited PSLF waiver. 

About the author

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